Singapore expects commitments under commercial gas contracts to be honoured, Prime Minister Lawrence Wong said on Sunday (25 October), after Indonesia began reducing natural gas exports to the Republic.
Separately, Minister for Energy, Trade and Industry (Energy and Industry) Tan See Leng said the cuts were unlikely to have much impact on Singapore’s electricity prices in the short term. Global gas prices remain a bigger factor in costs, he explained.
Importer Will Examine Contractual Remedies
Speaking at the People’s Action Party conference, PM Wong said Singapore’s gas importer would take the steps needed to safeguard its contractual rights and interests.
“The gas supplies are covered by commercial contracts. We expect all parties to honour their commitments,” he said.
Dr Tan subsequently told reporters that Gas Supply Private Limited would engage its Indonesian suppliers to determine whether a breach had occurred. If so, it would pursue the remedies available under the contracts, The Business Times reported.
He said the government would leave the examination of those contractual provisions to the importer.
Global Gas Prices Matter More for Electricity Costs
Indonesia began reducing exports on Saturday (24 October). Its upstream oil and gas regulator, SKK Migas, told CNA that supplies were being redirected to meet domestic electricity needs.
The Energy Market Authority (EMA) said the reduction represents less than 2 per cent of Singapore’s total daily gas demand. Natural gas generates about 95 per cent of the country’s electricity.
Dr Tan said Singapore has enough gas to meet demand, including replacement supplies from other sources.
On prices, he explained that much of Singapore’s gas is priced against global benchmarks. Movements in those international prices therefore remain more significant than this particular reduction. His assessment concerned the cuts’ short-term impact.
Replacement Supplies and Reserves Are Available
EMA said Singapore had previously replaced gas lost during planned or urgent maintenance with other supplies without incident.
Singapore GasCo is ready to import additional liquefied natural gas (LNG), while power generation companies must maintain fuel reserves, including diesel. Gas Supply separately told CNA that temporary reductions from its Indonesian supplier had affected customer deliveries and that it was communicating with those affected.
PM Wong said investment in LNG import infrastructure had given Singapore more options to manage supply disruptions. He also stressed the need to develop cleaner electricity sources that can operate around the clock.
On bilateral ties, Dr Tan said Singapore and Indonesia continued to have very good relations at the highest levels, including between PM Wong and President Prabowo Subianto. He acknowledged Indonesia’s domestic supply needs and bottlenecks, adding that Singapore would monitor developments closely.
